The Retail Transformation Imperative

Digital Business Strategy & Innovation

Across the world, the retail industry is being disrupted.

Consumers expect personalized experiences, with content aimed directly at their needs and desires. They expect to be able to engage with a brand anywhere and at any time, while technologies like mobile, social media, responsive environments and the cloud are leading to disruption in the retail industry by creating new models for customer interaction. As a retailer, now is the time to shift your perspective and leverage these changes to your competitive advantage.

It’s not about adding digital channels to your current model, or digitizing parts of it. It’s about truly changing with technology to enable problem solving and the ability to provide greater relevance with every customer interaction. Future winners in retail will power and connect the full customer journey, providing platforms that realize customer ambition and solve for needs throughout the path to purchase.

Five mindsets to win in retail now – and in the future.

1. Don’t deny the power of mobile.
Mobile is the most essential and dominant consumer platform of this century. Mobile platforms dominate because they connect consumers at all times and places, and help create a more individualized experience. For example, Target’s Cartwheel (the retailer’s U.S. savings app) is responsible for more than $1 billion in sales annually and encourages increased customer engagement through interactive features like scanning, exclusive offers, social integration and game-like rewards.1 Target reported that Cartwheel users spend more per trip and visit more often.2 Future, successful retailers will recognize mobile for the dominant platform that it is and, subsequently, optimize their customer experiences for it.

2. Realize that stores serve roles beyond conversion.
The store is no longer just the end point of the journey. As foot traffic in retail decreases globally, the role of the store needs to be re-evaluated. While retailers should still aim to increase in-store sales, brick and mortar spaces should also be seen as media and content ecosystems, opportunities for decision support or ways for customers to get extended care. A smart retailer uses its store as a foothold for all of its activities, rather than just as its experience journey’s final frame. Nordstrom is famously focused on great products and stellar customer service. In-store experiences, like their personal shopping service, provide hooks that drive shoppers to digital properties and, ultimately, to conversion. 

3. Understand that “in-store digital” is neither your mobile app, nor your website formatted for a touch screen.
The harsh reality is that few retailers have app download numbers worth boasting. The opportunity to support, engage and extend the shopping experience through in-store digital touchpoints cannot be ignored. That said, you can’t just recast your website in-store. Solutions need to be created to solve the problems that customers face. Home Depot’s Appliance Finder is a great example of this. This large, touch-based tool has significantly increased the company’s highest-margin-category sales by delivering an experience focused exclusively on the challenge of selling an appliance – a complex product whose sheer size makes it hard for shoppers to assess online and for Home Depot to maintain a full assortment of in-store.3 The scale and fidelity of the Appliance Finder interface allows customers to get a realistic sense for how appliances will look and feel in their homes, both freeing customers to research options without an associate and providing well-designed support for clienteling with an associate. Not least of all, it allows Home Depot to merchandise a broader assortment of appliances without having to utilize additional space or invest in stocked products for every location.

4. Don’t think of loyalty as your father’s “loyalty program”.
Traditional loyalty programs focused on cards, tiers and points aren’t going to succeed in creating devoted brand enthusiasts – there are simply too many retailers vying for attention. Instead, the focus of these programs needs to be driving relevance with customers. It’s about connecting customers to the store beyond the physical location through pre- and post-purchase interactions and opportunities, increasing the time that customers spend with the brand and introducing complementary products and services. For example, Starbucks’ app acts as its loyalty program and is wildly successful.4 The app not only reduces friction for purchasing, stores customers’ favorites and reduces wait times, but it also increases conversion and helps upsell. This is the future of loyalty.

5. Embrace the customer’s ecosystem, not just your own.
In the past, the assumed driver of competitive advantage in mass retail was the scale of a retailer’s footprint. The opportunity was, therefore, enabled or limited by that scale. Moving forward, connection with the larger ecosystem is the bigger opportunity. With the advent of application programming interfaces (APIs), retailers can easily expose their product catalogs, carts and other e-commerce services. These services can be consumed and integrated by a wide variety of partners and platforms (such as Google, Pinterest and Facebook), thereby providing a path for growth without the need to scale physical infrastructure. Best Buy, for example, uses their API to integrate with CitiBank’s rewards program and allow CitiBank customers to redeem points for Best Buy products directly from the CitiBank rewards site.

The imperative to change is in the air.

The bottom line is that, as a retailer (even one that’s doing “well enough”), the imperative to change is in the air. More than ever, consumers are increasingly in control and demanding of integrated omnichannel experiences. This requires us to re-imagine business in the age of the customer. And the time to transform is now.


  1. Fortune. “How Do Target and Walmart Stack Up in the e-Commerce Wars?
  2. Fortune. “Target Finds Rare Tech Edge: Its Popular Cartwheel Shopping App.”
  3. Mobile Marketing Association. “The Home Depot Appliance Experience."
  4.  Business Insider. “Starbucks’ Controversial Rewards Program Changes Drove Almost 1 Million Customers to Join.”

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